Legal experts say suit over Utah alcohol law will fizzle
Frustrated about not being heard in the recent legislative debate over alcohol, the hospitality industry hopes a lawsuit will bring the governor and legislative leaders to the table.
The legal action seeking to dissolve SB314, which outlaws discount drinks and severely limits the number of bar and club liquor licenses, has little chance of succeeding, say some legal observers.
But even if the Utah Hospitality Association doesn't prevail in court as hoped, bar and dining club interests aim to get the attention of politicians and the public in an effort to get some relief from actions they consider harmful to their livelihoods and economic development.
"We believe we will prevail, but we also know this is a gamble," said Kenneth Wynn, a hospitality association board member and former director of the Utah Department of Alcoholic Beverage Control. "We have not been able to get a hearing with the governor or the Legislature. We had no alternative other than to go to court to make our voices heard."
Wynn said the best option would be for businesses and political leaders to talk and to listen to one another "but it takes two sides, and so far, we're the only side out here."
Neither Gov. Gary Herbert nor Attorney General Mark Shurtleff, who were named as defendants in the suit, would comment on the case.
Civil rights attorney Brian Barnard, who has successfully sued the state on other issues, has little hope the hospitality association will win a legal victory.
The repeal of Prohibition in 1933 set the stage for the state-sovereignty-over-alcohol argument, he said. State powers in regulating liquor are so broad under the 21st Amendment that lawmakers could go as far as forbidding all liquor sales within Utah's borders.
"If the Utah Legislature said alcohol will no longer be sold, they can do it," said Barnard. "When the Legislature said 'we will sell it but these are the onerous restrictions we will put on it,' then so be it. End of story."
The lawsuit filed in U.S. District Court for Utah claims that the state is violating the Sherman Antitrust Act. The argument revolves around the assertion that the Legislature's actions have restrained trade on one level by improperly fixing liquor prices, and done so on another by refusing to take steps that would change the state's quota system for dispensing liquor licenses, which now prevents even a qualified person from getting a club license for as long as two years.
But Barnard said the 21st Amendment likely trumps the federal statute.
Barnard won a legal victory against the state more than a decade ago when he challenged Utah's ban on liquor advertisements. But he said the legal issue then involved the First Amendment right of free speech, which prevailed over the state's right to regulate liquor.
Pat Shea, who specializes in the First Amendment and is a constitutional law professor at the University of Utah, put it this way: "In jurisprudence, when the First Amendment comes into play, it is Mount Everest compared to the 21st Amendment mole hill."
Shea also agreed that the hospitality industry's lawsuit would be extremely difficult to win, and probably only on narrow grounds.
Barnard's lawsuit stemmed from an editor wanting to include alcohol service at restaurants in her magazine's dining guide. In 2001, the 10th U.S. Circuit Court of Appeals said Utah's advertising prohibition was irrational and probably unconstitutional.
Because of this ruling and other decisions in favor of commercial free speech rights, Utah restaurants can leave drink lists at their tables, waiters can ask customers if they want a glass of wine or a cocktail, and bars can put a neon sign in their window advertising that they sell beer.
Status of licenses
Lawmakers ignored their auditors' recommendations to increase the number of club licenses. The report:
Utah is out of line with other control states in number of available liquor permits.
Utah's population quota determining the number of licenses hasn't changed since 1990.
46 club licenses would be freed up if the Legislature consolidated hotel and resort licenses.
Maximum wait time for a club license in 2010 was eight months. Now, it will be up to two years before one club permit becomes available, state officials say.